5 Cheap Beginner Stocks to Buy

In this article, we will take a look at 5 cheap stocks to buy now for beginners. If you want to explore similar stocks, you can go to 15 Cheap Beginner Stocks to Buy.

5. QUALCOMM, Incorporated (NASDAQ:QCOM)

PE Ratio (TTM) as of March 28: 11.62

Number of Hedge Fund Holders: 82

QUALCOMM, Incorporated (NASDAQ:QCOM) was held by 82 hedge funds at the end of Q4 2022. These funds disclosed collective stakes worth $2.39 billion in the company. As of December 31, Matrix Capital Management is the top investor in the company and has a position worth $366.9 million.

This March, Susquehanna analyst Christopher Rolland upgraded QUALCOMM, Incorporated (NASDAQ:QCOM) to Positive from Neutral and reiterated his $140 price target. As of March 28, the stock is trading at a PE multiple of 11x and is placed fifth on our list of the best cheap beginner stocks to buy now.

Here is what Madison Funds had to say about QUALCOMM Incorporated (NASDAQ:QCOM) in its fourth-quarter 2022 investor letter:

“QUALCOMM Incorporated (NASDAQ:QCOM) continues to be challenged by headwinds in the smartphone supply chain with an expected decline in units for 2022. Despite solid gains in the Internet of Things and Auto segments, Qualcomm’s dominant business remains the smartphone market. We expect to see stabilization of the smartphone market in 2023, including a recovery in China.”

4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

PE Ratio (TTM) as of March 28: 14.41

Number of Hedge Fund Holders: 86

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the best cheap beginner stocks to buy now and is trading at a TTM PE ratio of 14.41, as of March 28.

This January, Morgan Stanley analyst Charlie Chan reiterated his NT$700 price target and an Overweight rating on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). The analyst also named the stock as his “Catalyst Driven Idea”.

86 hedge funds disclosed having stakes in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the close of Q4 2022. The total value of these stakes amounted to $10.2 billion. As of December 31, Lone Pine Capital is the leading stockholder in the company and has a position worth $774 million.

Here is what Baron Funds had to say about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third-quarter 2022 investor letter:

“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) detracted from performance due to the global macroeconomic slowdown and softening demand for consumer electronics. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, and IoT, will allow the company to deliver strong revenue growth over the next several years.”

3. Wells Fargo & Company (NYSE:WFC)

PE Ratio (TTM) as of March 28: 11.84

Number of Hedge Fund Holders: 87

On January 17, Citi analyst Keith Horowitz raised his price target on Wells Fargo & Company (NYSE:WFC) to $52 from $48 and maintained a Buy rating on the shares.

As of March 28, Wells Fargo & Company (NYSE:WFC) has a TTM PE ratio of 11.84 and is yielding 3.23%. Wells Fargo & Company (NYSE:WFC) is one of the best cheap beginner stocks to buy now according to hedge funds.

At the close of the fourth quarter of 2022, 87 hedge funds were bullish on Wells Fargo & Company (NYSE:WFC) and disclosed collective stakes worth $5.56 billion in the company. This is compared to 77 hedge funds in the previous quarter with stakes worth $4.95 billion. The hedge fund sentiment for the stock is positive.

As of December 31, Eagle Capital Management is the largest stockholder in Wells Fargo & Company (NYSE:WFC) and has a position worth $1.1 billion.

Davis Advisors made the following comment about Wells Fargo & Company (NYSE:WFC) in its 2022 annual investor letter:

“Our investment thesis for our next largest bank investment, Wells Fargo, is totally different. As is well known, Wells Fargo & Company (NYSE:WFC) is the country’s third-largest bank, serving one in three U.S. households. Years of regulatory missteps under prior managements resulted in reputational damage, higher-than-average expenses, numerous consent orders, caps on asset growth, all added to the negative impact of low rates on their interest income. However, where others see bad news, we see resiliency and gradual improvement. Wells Fargo’s resiliency is reflected in the fact that despite years of terrible headlines and congressional hearings, Wells Fargo’s core customers stayed put and customer attrition remains extraordinarily low.

As to gradual improvement, new management has made steady headway in closing consent orders, settling regulatory matters and upgrading systems. Thus, rather than increasing profits from growth, Wells Fargo’s earnings growth for the next three-to-five years should come from the combined tailwinds of rising interest income, partially offset by normalizing credit costs, reduced expenses as systems improve and the scandals of the last decade are gradually put behind them, and the return of excess capital through share repurchases and rising dividends. The hypothetical earnings bridge displayed in Figure 6 gives some sense of the earnings power we see unfolding in the years ahead for this durable financial franchise.

While our grounded optimism carries the day, we are mindful of the risk that Wells Fargo’s historically excellent credit culture may have deteriorated, or that exasperated regulators may choose to extract even more major penalties for past infractions.”

2. JPMorgan Chase & Co. (NYSE:JPM)

PE Ratio (TTM) as of March 28: 10.66

Number of Hedge Fund Holders: 100

JPMorgan Chase & Co. (NYSE:JPM) was spotted on 100 hedge funds’ portfolios at the close of Q4 2022. These funds held collective stakes worth $5.17 billion in the company. As of December 31, Greenhaven Associates is the most prominent shareholder in the company and holds a stake worth $643 million.

JPMorgan Chase & Co. (NYSE:JPM) has returned 23.58% to investors over the past 6 months, as of March 28, and is trading at a PE multiple of 10x. The stock is placed second on our list of the best cheap stocks to buy now.

This March, RBC Capital revised its price target on JPMorgan Chase & Co. (NYSE:JPM) to $132 from $150 and maintained an Outperform rating on the shares.

Here is what Vltava Fund had to say about JPMorgan Chase & Co. (NYSE:JPM) in its third-quarter 2022 investor letter:

“We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.

JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big US bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.

A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.”

1. Bank of America Corporation (NYSE:BAC)

PE Ratio (TTM) as of March 28: 8.82

Number of Hedge Fund Holders: 100

Bank of America Corporation (NYSE:BAC) is the best cheap stock to buy now according to hedge funds. As of March 28, the stock has a TTM PE ratio of 8.82 and is offering a forward divided yield of 3.13%.

On March 24, RBC Capital analyst Gerard Cassidy updated his price target on Bank of America Corporation (NYSE:BAC) to $34 from $40 and maintained an Outperform rating on the shares.

At the end of Q4 2022, 100 hedge funds were long Bank of America Corporation (NYSE:BAC) and disclosed positions worth $37.5 billion in the company. Of those, Berkshire Hathaway was the leading investor in the company and disclosed a position worth $33.4 billion.

Here is what Ariel Investments had to say about Bank of America Corporation (NYSE:BAC) in its Q3 2022 investor letter:

“We initiated three new positions in the quarter. We added leading financial institution Bank of America Corporation (NYSE:BAC) which serves individual consumers, small and middle-market businesses, and large corporations with a full range of banking, investing, asset management, and other financial and risk management products and services. The current company was formed through various mergers including NationsBank, FleetBoston, US Trust, Countrywide Financial, and Merrill Lynch with the legacy commercial bank to form a national banking powerhouse and bulge bracket investment firm. As one of the ‘Big Four’ U.S. banks it enjoys scale driven cost advantages and economies of scale which provide meaningful competitive advantages and potential for strong returns in the largely commoditized banking industry. A survivor of the financial crisis, BAC has emerged with a solid capital base and stands to benefit from a rising interest rate environment.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a look at 11 Best Counter Cyclical Stocks To Buy Now and 12 Best Consumer Cyclical Dividend Stocks To Buy Now.